Rapeseed futures will continue to outperform soybeans, as the production deficit in the global market tells, Commerzbank said.
The bank is bullish on prices for both commodities, but notes that a “considerably tighter” market has been supportive for rapeseed compared to soybeans.
And Commerzbank believes it is “rather unlikely” that the current squeezed rapeseed supply will come to an end, thanks reduced European production and increased Chinese demand.
The rapeseed price, as measured by Paris futures, is likely to climb to E390 a tonne by the end of 2016, Commerzbank said.
May Paris rapeseed futures are currently trading at E352 a tonne. The November contract, the last in 2016, is at E347.50 a tonne.
Tight market
Commerzbank said the rapeseed market has “long been far tighter than the soybean market”.
In Paris, front-month rapeseed futures are down around 1%, and in Canada, prices for the rapeseed-cultivar canola are up nearly 2% since the start of 2015, while in
By comparison, Chicago soybean prices have lost nearly 15% over the same period.
Declining production
Despite a sharp upgrade to Canadian canola prospects at the end of last year, Commerzbank warned that the market is “sliding into defect” after two years of balanced supply and demand.
And this deficit situation is “hardly likely to change”, the bank warned.
In Europe, Copa-Cogeca and Stratagie Grains have both forecast rapeseed production to decline by 2.6% in 2016-17, thanks to lower estimates, while Oil World sees production more in line with the previous session, but still well down from 2014-15’s record levels.
“In China meanwhile, a sharp slump in production as a result of policy changes could result in increased import demand,” Commerzbank warned.
No fear of soybean shortage
For soybeans, on the other hand, Commerzbank saw “no need whatsoever to fear any shortage”.
“The new crop from South America will reach the world market in the coming weeks, while initial indications from the US likewise suggest another high crop,” the bank said.
Commerzbank saw Chicago soybean futures at $9.00 a bushel by the end of year.
The November Chicago soybean contract is currently trading at $8.81 a bushel.
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